JUNE 2023 BUILDING MATERIAL MARKET REFLECTION
A perfect storm of forest fires, mill curtailments, and a positive U.S. housing report turned the market 180 degrees and gave it the momentum it has been searching for, for months. Reports of the excess Euro wood in the U.S. clearing the pipeline may have also had an impact, prompting buyers who were on the fence, into the market to cover off inventory needs.
New Residential Construction Press Release (census.gov)
Lumber prices showed their biggest upward movement in months with increases of 2×4 (+18%) and 2×6 (+7%) and 2×8 (+24%) and 2×10 (+21%). Studs showed similar gains for the month with +18% on 2×4 with 2×6 remaining flat at +2%. Mill order files are pushing late July on all items.
OSB started the month quietly but surged upwards in the last two weeks of June. Showing increases of +15%-20%. Mills have pushed order files into mid-August so we can expect prices to remain strong. We are seeing a large premium, upwards of $200/M on product coming out of distribution vs contract pricing.
Plywood prices also started to push upward (+2%) for the month. Mills were able to push order files into late July. Expect Plywood prices to continue to push higher.
Truss orders remain strong heading into the summer months. EWP supply continues to be very good with no supply issues to report.
The supply chain continues to be particularly good in most products, outside of the odd logistical issue most products are arriving on the scheduled delivery dates. Exterior drywall supply continues to improve as well. We are seeing price decreases slowly hit the market as most raw material costs continue to go down.
Looking Through the Crystal Ball
The pendulum finally shifted to a shortage on the supply side, with a combination of forest fires, mill curtailments, and Euro wood clearing the pipeline. The question now is how many legs does this market have. With current mill order files, we know this momentum will continue through July, but the picture gets a bit murkier. The forest fires seem to be under control for now, mills will continue to come back online from their curtailments and at some point, more offshore product is expected to arrive in North America. All the factors that caused the shift in supply could also shift it back.